Asymmetric Impact of Crude Oil Cost on Diesel Price in Canada: Evidence from Nonlinear ARDL Model

This paper examined the retail diesel market in Canada for evidence of asymmetric price adjustment and rent-seeking arising from the fluctuations in crude oil prices over the period January 2005 to December 2015. The study used the recently introduced nonlinear ARDL model. The findings indicate sluggish speed of adjustment of 22% for both ex-tax prices and pump prices, which is typical of markets witnessing weak competition and prolonged periods of mispricing. However, the results further indicate that Canadian consumers of retail automotive diesel are sufficiently insulated from the fluctuations of the international crude oil market since the estimated long-run coefficients ranged between 0.60 and 0.69. At the 5% level, the results did not show significant evidence of long run asymmetry in the retail diesel market. In addition, the results did not indicate significant short run additive asymmetry at the 5% level or the prevalence of the rockets and feathers effect. The absence of the rockets and feathers effect also means that the market is free from the problem of rent-seeking by retailers. This is desirable and indicates that regulatory policies should continuously monitor the market in order to preserve competition and the overall social welfare. Keywords: Asymmetric Price Adjustment, Rockets and Feathers Effect, Nonlinear ARDL Model, Canada. JEL Codes: Q43; D40; C22; N12 DOI: 10.7176/JESD/10-4-1

ACCESS TO CREDIT AND PHYSICAL CAPITAL STOCK: A STUDY OF NON-FARM HOUSEHOLD ENTERPRISES IN NIGERIA

This study investigated the influence of access to credit on the physical capital stock of non-farm household enterprises in Nigeria. The study used the binary logistic regression technique and Nigeria’s 2018-19 General Household Survey data (Wave 4). We find that the influence of access to credit on the physical capital stock of nonfarm household enterprises in Nigeria is positive and significant. This implies that access to credit enhances the capacity of these enterprises to procure physical capital stock. Our results also indicate that expenditure on raw materials, profit, and years of operations are other key drivers of physical capital stock accumulation. Consequently, we conclude that there is a need for policies to enhance access to credit by non-farm household enterprises in Nigeria to strengthen their operations on a sustainable basis

Response of Italian Domestic Heating Oil Market to Variations in Crude Oil Costs: Symmetric or Asymmetric?

This study examined the Italian domestic heating oil market for evidence of asymmetric price adjustment and rent-seeking following changes in crude oil costs. The study adopted the recently developed nonlinear autoregressive distributed lag (NARDL) modeling framework, and used monthly time series data for the period January 2005 to December 2015. The findings reveal that the speed of adjustment was sluggish at 17% all through, which is typical of markets witnessing irregular behaviours such as collusion and rent-seeking. The results further indicate the presence of short-run additive asymmetry at 5% level only at pump, which is consistent with the rockets and feathers effect. However, the results did not show any evidence of long-run asymmetry or long-run rent-seeking. Even in the short-run, the results did not reveal any pattern of rent-seeking. Thus, the study concludes that the presence of sluggish speed of adjustment and rockets and feathers effect in the pump prices raise serious anti-trust issues. Accordingly, the study recommends that the market should be continuously monitored so that the dominant status of retailers like the Eni brand is not abused, thereby leading to less competition and collusive behaviours. Keywords: Rockets and Feathers effect; Rent-seeking; Asymmetric Price Adjustment; Nonlinear ARDL model; Italy JEL Codes: Q43; D40; C22; N94. DOI: 10.7176/JETP/9-2-0

Testing for Asymmetric Pricing in the French Retail Industrial Fuel Oil Market

This study investigated the French industrial fuel oil market for evidence of asymmetric price adjustment and rent-seeking following changes in crude oil prices. The study adopted the nonlinear autoregressive distributed lag (NARDL) framework recently advanced for modeling cointegrating relationships. The study also used monthly time series data for the period January 2005 to December 2015. The results indicate that French industrial fuel oil market is fraught with sluggish speed of adjustment, which is typical of markets witnessing uncompetitive pricing and other irregular behaviours by retail firms. The results further indicate that French industrial fuel oil market is bedeviled by the problem of short-run asymmetric price transmission from crude oil market, which is consistent with the rockets and feathers effect. However, the results did not show any evidence of rent-seeking since the observed short-run asymmetry is not obscured at pump. The study concludes that in view of the prevailing problem of rockets and feathers effect, policies that encourage continuous monitoring of the market in order to preserve competition and the overall social welfare should be embraced by policymakers and regulators in this market. Keywords: Rockets and Feathers effect; Rent-seeking; Asymmetric Price Adjustment; Nonlinear ARDL model; France JEL Codes: Q43; D40; C22; N94. DOI: 10.7176/JETP/9-2-0

Is Japanese Retail Industrial Fuel Oil Price Stickier Downwards Than Upwards in Response to Oil Cost Shocks?

This paper examined the Japanese industrial fuel oil market for evidence of asymmetric price adjustment and rent-seeking following changes in crude oil prices. The study used the nonlinear autoregressive distributed lag (NARDL) modeling framework and monthly time series data for the period January 2005 to December 2015. The results indicate that Japanese industrial fuel oil market is fraught with sluggish speed of adjustment, which is typical of markets witnessing uncompetitive pricing and other irregular behaviours by retail firms. The results further indicate that Japanese industrial fuel oil market is bedeviled by the problem of short-run asymmetric price transmission from crude oil market, which is consistent with the rockets and fathers effect. However, the results did not show any evidence of rent-seeking since the observed short-run asymmetry is not obscured at pump. In view of the prevailing problem of rockets and feathers effect, the paper supports policies that will encourage continuous monitoring of the market in order to preserve competition and the overall social welfare. Keywords: Rockets and Feathers effect; Rent-seeking; Asymmetric Price Adjustment; Nonlinear ARDL model; Japan JEL Codes: Q43; D40; C22; N94. DOI: 10.7176/JESD/10-4-1

The Impact of Climate Change on the Nigerian Economy

This paper examined the impact of climate change on the overall growth of the Nigerian economy. The OLS estimation technique and data for the period 1981 to 2014 were used. Changes in annual rainfall, carbon emission and forest depletion were used to capture climate change, while changes in government expenditure, domestic private investment and exchange rate were used as control variables. The results indicate that both in the long-run and short-run, carbon emissions affect growth adversely. In addition, forest depletion impacts negatively on growth in the short-run. These results imply that Nigerian government should evolve and implement policies to curb carbon emissions and forest depletion. In particular, a National Climate Change Commission is required in Nigeria to deal with all climate change issues. Furthermore, the finding that domestic private investment and naira-to-dollar exchange rate impede growth in Nigeria means that policymakers and governments at all levels in Nigeria should evolve and implement policies to reverse these undesirable outcomes. Keywords: Climate Change; Economic Growth; Ordinary Least Squares; Nigeria JEL Classifications: Q25; O40; C22; N1

The Impact of Deposit Money Bank's Agricultural Credit on Agricultural Productivity in Nigeria: Evidence from an Error Correction Model

This paper examined the impact of deposit money bank agricultural credit on agricultural productivity in Nigeria using an error correction model and annual time series data for the period 1981 to 2014. The results indicate that an equilibrium relationship exists between the variables. In addition, we find that deposit money bank's agricultural credit impacts positively and significantly on agricultural productivity in the long-run, but this impact is quite negligible in the short-run. We also find that agricultural land and labour force impact negatively on agricultural productivity both in the long-run and short-run. However, the impact of climate change variables, namely annual rainfall and average temperature remained negligible throughout. The paper therefore supports policies that will enhance and sustain the availability of bank credits at affordable interest rates for the agricultural sector, ensure easy access to land for agricultural purposes, and mechanize the agricultural system to attract the youth population. Keywords: Deposit Money Bank; Agricultural Credit; Agricultural Productivity; Error Correction Model; Nigeria. JEL Classifications: E51; Q14; O13; C22; N5

Human Capital Development and Economic Growth in Nigeria

Human Capital is an integral part of any country’s development and economic growth has human capital as an important factor. This study evaluates the relevance of human capital development on the growth of the economy pin pointing the relationship that exists between them. In this study, the ordinary least square (OLS) technique was adopted. The GDP was used as a proxy for economic growth; Per Capital Real Gross Domestic Product, primary school enrolment, public expenditure on education and health, life expectancy, stock of physical capital as proxy for human capital. From the analysis, it was deduced that there is a strong positive relationship between human capital development and economic growth. The recommendations drawn from the study centered on revisiting the man-power needs of the various sectors of the economy. Also, while workable policies should be put in place to bring about an overall economic growth, expenditures on health and public education should be utilized effectively and efficiently so that the country would experience quality health care services and quality educational system. Key words: Human Capital, GDP, Economic growth, Ordinary Least Squares, Nigeri

Would Exchange Rate Converge in Nigeria?A Stochastic-Markov Transition Process Analysis

This paper examined if the Nigerian exchange rate would converge in the long run thereby looking at the exchange rate switches or transition from a particular state to another. This was done via the iterations of the Chapman-Kolmogorov equations of the Markov model, It was discovered that convergence occurred in the long run as shown by our markov model. It suggests that appreciation and depreciation of the naira via dollar rate would be stable as indicated by the probability values. Keywords: Markov, Transition probabilities, Exchange rate, Chapman-Kolmogoro

Non-Oil Export and Exchange Rate Nexus in Nigeria: Another Empirical Verification

This study examined the nexus between Exchange Rate and Non-Oil Export in Nigeria using time series data from 1985 to 2018. Secondary data were sourced from the Central Bank of Nigeria (CBN), National Bureau of Statistics (NBS) and World Bank Development Indicators (WDI). The study adopted Autoregressive Distributed Lag (ARDL) model and it was fitted with Seven variables; namely, Non-oil Export (NOE), Exchange Rate (EXR), Credit to Private Sector (CPS), Trade Openness (OPN), Inflation (INF), Interest Rate (INT) and Foreign Direct Investment (FDI). The results showed that the exchange rate has a positive and significant impact on non-oil export in Nigeria. Therefore, the study recommended that the Government should encourage international trade to boost non-oil export and increase foreign exchange earnings. Also, there is a need for the government to improve the financial institutions to make investment funds available. Lastly, there is a need to revisit the export-oriented policy to ensure that the non-oil sector is well catered for